He owns 19 single family houses (Many of which are completely paid off) a few blocks away from CU Boulder.

Hello I am still new to this real estate business and I am wondering if it is prudent for a newbie to buy their first multi-unit apartment building on a block full of competing apartment buildings or should the approach be to buy an apartment on a different area of town where there are little to no competitions?

The neighborhoods change a lot in that area from block to block and I would recommend familiarizing yourself with the area to be fully aware of the class of property and neighborhood you are buying.

You could go 5 blocks west, same neighborhood/values....go 2 blocks east, different neighborhood with values 40% higher/lower.  

There are plenty of good well paying jobs around, mostly factory but the work is here and close by although I’m new to the area (5 months) I’ve noticed some hot spots for crime, drugs mostly, but what confuses me is one block is decent, yards maintained, clean looking, nice curb appeal, but then you go a block down and it looks like a war zone.

It is mildew resistant, but I thought Kilz was mostly to block stains and acted as a sealer.

As @Rob Bergeron points out, there are some pockets experiencing higher demand/growth but if you're not familiar with them then you could end up buying a block or two the wrong direction and having a horrible time with your investment.

The block that I am buying on has other investors currently rehabbing houses as well. 

I believe that our investing strategy should be colored by the economy at large, not dictated by it. 

Our place is a couple blocks north of there.